What are pensions of mercy (Pensiones de Gracia)?

Chilean Pension of Mercy (Pensiones de Gracia) payments were established by law by the Chilean Government in the early 1990s to compensate and repair the moral suffering of the victims, and relatives of victims, of human rights abuse or political violence that occurred in Chile between 11 September 1973 and 10 March 1990. The payments are those made under Chilean Law 19.123 (mercy payments) and those made under Chilean Law 19.234 and its amendments (periodic mercy payments).

How does the social security agreement between Australia and Chile affect the way pensions of mercy are treated in calculating the rate of Australian payments?

Prior to the commencement of the Agreement, Australian social security law required that Pensions of Mercy be taken into account under the income test applied to determine the rate of Australian benefit payable to a person. Now that the Social Security Agreement between Australia and Chile has begun operating Article 17 of the Agreement allows Pensions of Mercy to be exempt from these income tests.

Will pensions of mercy be exempt from the calculations to determine the rate of all Australian social security payments?

Yes. The Agreement exempts Pensions of Mercy from the calculations to determine the rate applied to all Australian benefits paid under Australian social security law. This means that even if you are receiving an Australian benefit that is not covered by the Agreement, your Pension of Mercy will be exempt from the calculation that is applied to your benefit.

I currently receive an Australian social security payment and my Chilean pension of mercy is currently included in the income test. How does the agreement benefit me?

Article 17 of the Agreement exempts your Pension of Mercy from the income test that is applied to your Australian benefit. This means that if your Pension of Mercy was being assessed as income prior to the Agreement commencing on 1 July 2004 you may receive an increase in your Australian benefit.

How do I have my current pension of mercy exempted from the calculation applied to my current payment?

Centrelink will be able to reassess your current Australian benefit and exempt your Pension of Mercy after 1 July 2004. You will need to contact Centrelink and provide them with evidence that you are receiving a Pension of Mercy and the rate of the pension (for example your latest Chilean pension statement). Centrelink can generally only reassess your benefit from the date you advise them.